Parabolic SAR TMA Strategy For MT4
The Parabolic SAR TMA Strategy For MT4 is a knock-down type edge that can help you trade with trend and counter-trend. Very few systems are out there in the market that can handle the counter-trend trading strategy along with the trend trading strategy. Parabolic SAR, Trend Signal indicator MQ4, Heiken Ashi Trend, and the fast TMA band are the prominent indicators for the strategy template.
The reason for the rise in the popularity of strategy files is the ease of use. Many traders have lost their capital just because they set the wrong input in the indicators. But you don’t have to worry about the settings as the template will provide a perfect environment for the traders. All you need to know is the essential steps to open the trade.
But don’t get us wrong that won’t have to work hard just because you have the battlefield ready. Still, you have to master the steps that are required to open the short and long trade with this system. People who are skilled at trading always focus on the graphical representation. When you know the graphical steps of a system, you don’t need to memorize any part of the strategy.
Before we move on to the steps, remember the fact, trend trading strategy is easier compared to a reversal strategy. So, we will use different techniques and different risk exposure levels for these two types of setups. Regarding the time frame, the recommended time frame starts from 4H and above. The reason to give priority to HFT data is to get more accurate signals.
Parabolic SAR TMA Strategy For MT4 Long trade setup
When the traders get dynamic channels, they become active to buy the support and sell the resistance. But this is not the way we should take the trade. Firstly, we have to determine the designated time frame for the edge. For this SAR TMA strategy, we will depend on the 4H and higher time frame.
You may say, taking trades in the 4H is a bit conservative as you will testing your patience limit. But to become a top trader, you must test your patience limit throughout the career. As we have said, this edge is designed for reversal and trend continuation strategy. We will learn to open the long trade with the trend.
The slope of the TMA channel should have a positive degree from the ground reference line. This means the channel should be heading north. We need two big aqua color dots in the IQ parabolic SAR indicator. The third dot is the place where we might find the buying opportunity. So, how do we know when the third big aqua dot will form? We have to look for a bearish retracement towards the minor support level.
The minor support level will be reinforced with the TMA band. As the price test the TMA band, the aqua color dot should appear on the chart. Open the long trade on the next candle. Place you stop beneath the tail of the candle that has the aqua dot.
For the take profit, we can set it to the upper TMA band or we can ride the trend as we will be taking our order in favor of the trend.
Parabolic SAR TMA Strategy For MT4 Short trade setup<
For our short trade, we will learn to take the trade against the trend. The price will fail to create a new high and the creation of the aqua or the bullish dot in the IQ parabolic SAR will have a small time interval. The small interval in the time suggest us, the buyers are giving their best but still failing to secure a new high.
If you see a medium-sized purple dot at the resistance level and the small subsequent purple dot start forming with the fall of the price, you can expect to see a change in trend. Find the support level by using the line too. Upon the break of the support level, it will turn into a strong resistance zone. The price should rally back to the resistance zone and this level should match with the TMA band.
Any bearish candlestick pattern or doji formation is the indication to open the short trade. As the trade is taken against the trend, we have to depend on the doji of the bearish pattern. You can also look for a prominent bearish chart pattern to open the short. When you open the short, be sure the stop loss is placed 10 pips above the most recent high.
In case, the stop loss becomes too wide, you can set the Sl 18 pips above the TMA bands. For the take profit, you should multiple the stop loss with the integer 4 so that you get 1:4 risk to reward ratio from that certain trade. Let’s learn more about the advanced trade management technique so that we can get the best from this edge even though it’s a very easy strategy.
Managing the trades
When investors focus on the trend trading technique, the overall trading process becomes much easier. The traders don’t have to depend on the complicated price dynamics to short the asset. They can risk 2-3% of the account balance. If possible they can increase the lot size by tightening the stop with the help of doji or pin bar.
When the trade is taken against the prevailing trend, we should determine the selling zone properly. If the resistance is strong enough and it convinces you the bearish reversal will take place, you can risk 2% of the balance. Otherwise, you should risk only 1% of the capital. The rookies should go with the 1% rule as they don’t have much knowledge to take trades at the top of a trend.
Being a new investor, you can significantly improve your reversal trading technique with the help of fundamental news. Study the major news and try to correlate it with the major technical parameters. If the level matches your fundamental analysis, you do have a golden setup that can generate significant profit.
You can even use the trailing stops in the reversal trading technique and this can significantly improve your RR ratio. Practice this edge in the paper trading account so that you don’t hesitate to use the tools properly.
Download the complete system description and the files here: